LIBERAL Democrat Business Secretary Vince Cable will today warn party colleagues of the “great sense of grievance” that people who did not create the financial crisis are “paying the penalty”.

And Mr Cable will tell the party that the public will reject the UK Government’s austerity programme unless it is seen to be fair.

He will also use his conference speech in Birmingham to kick-off a UK-wide discussion on the “dysfunctional” system of executive pay as he seeks to “call time on payouts for failure”.

Mr Cable will be the latest senior Lib Dem to defend the party’s record in power with the Conservatives and insist it is right to make deficit reduction a priority.

The fightback comes as the latest YouGov polling puts the Lib Dems on just 9%, behind the Conservatives on 36% and Labour on 42%.

Deputy Prime Minister Nick Clegg yesterday described rumours that he will stand down after one term as party leader as “drivel”. Brushing aside speculation he will quit to become a European commissioner in 2015, he said he would serve “well beyond one term”.

Chief Secretary to the Treasury Danny Alexander also defended his party’s role in Government, stating: “Interest rates have stayed low, keeping workers in their jobs and families in their homes.”

He insisted Lib Dems should be proud they played a “decisive role in securing our country’s financial credibility.”

Ruling out a change in direction, he said: “We must stick to our plans and we will.”

Mr Alexander also pledged to crack down on high-earning tax-dodgers, saying: “My message to the small minority who don’t pay what they owe is simple, I agree with the Chancellor: ‘We will find you and your money’ and you will pay your fair share.”

He told delegates this year an additional 2,250 HMRC staff will move into new “anti-evasion and avoidance jobs”.

Mr Cable will today insist that the party’s determination to secure economic stability is also coupled with a concern for “solidarity” and a desire to reduce “our appalling inequalities of income and wealth”.

He will tell delegates: “The public will only accept continuing austerity if it is seen to be fair.

“There is a great sense of grievance that workers and pensioners are paying the penalty for a crisis they did not create. I want a real sense of solidarity... which means a narrowing of inequalities.

“We have, as a party, made clear our priorities for continuing to lift low and average earners out of tax. And the wealthy must pay their share.”

In the foreword to the discussion paper on corporate pay he will launch today, he states: “The disconnect between pay and long-term performance suggests that there is something dysfunctional about the market in executive pay or a failure in corporate governance arrangements. We want to explore what is causing it and how it can be addressed.”

Potential proposals which could come out of the debate include giving shareholders a “binding vote” on deciding pay and putting staff members on remuneration committees.

The Government will also publish a consultation on measures which could require each board director’s remuneration to be published – including details of basic salary, bonuses, share schemes and pensions.

Mr Alexander also encouraged activists to look to the next manifesto and the possibility of lifting many of the country’s lowest earners out of tax.

He said: “In the next parliament, I want us to go further; our aspiration should be that someone working full time on the minimum wage should pay no income tax at all.

“An income tax threshold of £12,500 – think what that would do to work incentives, think what it would mean for basic fairness. Let’s put that on the front page of our next manifesto.”

And in an apparent rejection of the call by 20 leading economists – including three based at Cardiff University – for the 50p top rate of income tax to be scrapped, he said: “Some people have argued that we should change our tax priorities and focus our limited resources on cutting taxes for the wealthiest instead. At a time of austerity, this argument simply beggars belief.

“If we are all in this together, those with the broadest shoulders must bear the greatest burden.

“Fair taxation of the wealthiest is key to our deficit reduction plan. Of course, if a better way can be found to raise the money from this group, I will be willing to consider it. But right now we must focus relentlessly on those who are struggling.”

Party president Tim Farron said in a tub-thumping speech that the economists were “utterly wrong”, stating: “At a time when 90% of the country is struggling to pay the rent or the mortgage, giving a tax cut to those who need it the least would not just be economically witless, it would be morally repugnant.”

However, former Welsh Liberal Democrat leader Lembit Opik fears that the party has yet to give voters a convincing “narrative” which shows how it is making a positive difference in government.

He said: “If it doesn’t add up to a big message people will ask, ‘What are the Lib Dems for?’.

“I’m really concerned that we’ve got to a stage where individuals who used to support the party are so disillusioned we’ve lost about a third of our vote to Labour.”

Angela Eagle, Labour’s Shadow Chief Secretary to the Treasury, said: “If the Liberal Democrats really want those at the top to pay a fair share then they would back Labour’s call for another tax on bankers’ bonuses to fund the building of thousands of affordable homes and create up to 100,000 jobs for young people.

“And, if they really want to help ordinary families and boost the stalled economy, they would temporarily reverse the damaging VAT rise they campaigned against in the General Election.

“We have repeatedly warned that deep and rapid cuts to HMRC’s budget and the loss of thousands of tax inspectors risked being a false economy. If this is a genuine rethink it is welcome, but we will need to see the detail of the plan.

“And taxpayers will be concerned at the wasteful costs of making staff redundant only to be rehired a few months later.”